Correlation Between Invesco NASDAQ and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ and Pacer Funds at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Invesco NASDAQ and Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ Future and Pacer Funds Trust, you can compare the effects of market volatilities on Invesco NASDAQ and Pacer Funds and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Invesco NASDAQ with a short position of Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and Pacer Funds.
Diversification Opportunities for Invesco NASDAQ and Pacer Funds
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Invesco and Pacer is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ Future and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust and Invesco NASDAQ is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Invesco NASDAQ Future are associated (or correlated) with Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Invesco NASDAQ i.e., Invesco NASDAQ and Pacer Funds go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and Pacer Funds
Given the investment horizon of 90 days Invesco NASDAQ Future is expected to generate 2.29 times more return on investment than Pacer Funds. However, Invesco NASDAQ is 2.29 times more volatile than Pacer Funds Trust. It trades about 0.1 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.06 per unit of risk. If you would invest 2,936 in Invesco NASDAQ Future on September 12, 2024 and sell it today you would earn a total of 105.00 from holding Invesco NASDAQ Future or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco NASDAQ Future vs. Pacer Funds Trust
Performance |
| Timeline |
| Invesco NASDAQ Future |
| Pacer Funds Trust |
Invesco NASDAQ and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and Pacer Funds
The main advantage of trading using opposite Invesco NASDAQ and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ position performs unexpectedly, Pacer Funds can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pacer Funds will offset losses from the drop in Pacer Funds' long position.| Invesco NASDAQ vs. iShares ESG Aware | Invesco NASDAQ vs. iShares ESG Aware | Invesco NASDAQ vs. iShares ESG 1 5 | Invesco NASDAQ vs. iShares ESG USD |
| Pacer Funds vs. Freedom Day Dividend | Pacer Funds vs. Franklin Templeton ETF | Pacer Funds vs. iShares MSCI China | Pacer Funds vs. Tidal Trust II |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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